Following Albert Reynolds' resignation from the Cabinet, O'Connell supported him and is seen as one of those who helped persuade Haughey to resign when he did. O'Connell was appointed Minister for Health by Reynolds in 1992. He remained as Minister for Health until 1993, when he resigned from the Dáil and the Cabinet due to ill-health.

Further controversy surrounded O'Connell's relationship with Charles Haughey in later years. It was revealed during the Moriarty Tribunal firstly that O'Connell was the middleman for donations from Arab tycoon Mahmoud Fustok to Haughey; and secondly that O'Connell had invested a significant sum in Celtic Helicopters, a business venture owned by Haughey's son Ciaran.